Hiring in India in 2026: What an Employee Really Costs
Two rule changes in under a year raised the cost of most Indian job offers. We re-priced a standard offer under both, compared the latest wage notices for six states and checked who holds the employment contract at ten EOR providers.
Five figures to know before you make an offer
Four costing mistakes that skew an India offer
India’s payroll rules changed twice in under a year, and minimum wages are set state by state. Caps such as the PF ceiling and the ESI limit are easy to miss, so a budget built on last year’s figures can be out by more than ₹1,000 a month per hire.
Using the old ₹15,000 PF ceiling
Employer PF has run on wages up to ₹25,000 since 17 September 2026, still at 12%. Budgeting on ₹15,000 understates a ₹1 lakh offer by ₹1,200 a month, or ₹14,400 a year.
Pricing every hire at one national minimum wage
India has no national minimum wage in force yet, so each state sets its own, and Karnataka’s latest Bengaluru rates took effect on 22 May 2026. The skilled floor there is ₹28,285 a month, ₹14,357 above Hyderabad’s ₹13,928, and our six-state table below has professional tax too.
Adding ESI to a ₹1 lakh salary
ESI only covers staff earning up to ₹21,000 a month gross, a ceiling in place since January 2017. Charging the 3.25% employer share on ₹1 lakh adds ₹3,250 a month you will never pay, or ₹39,000 a year.
Waiting for 15 staff before setting up a company
On Deel’s published India costs, checked in October 2026, your own company costs less than EOR fees from about six employees on running costs and about eleven in year one. At 15 staff you would pay roughly ₹92.4 lakh a year in fees for a team whose company would run on ₹35 lakh.
Rates as in force on 22 October 2026. Money figures assume ₹1,00,000 gross with basic at half of pay, and a $599 monthly EOR fee.
The same ₹1,00,000 salary now costs ₹2,021 more a month
Many Indian offers kept basic pay near 35% of salary so that provident fund and gratuity stayed small. The Code on Wages ended that from 21 November 2025, and the higher PF ceiling in September 2026 added to it.
Offer written in 2024
Basic ₹35,000Same offer in October 2026
Basic ₹50,000The PF ceiling change gets less attention than the wage rule, but on this salary it causes most of the increase. ₹1,200 of the ₹2,021 a month comes from employer PF now running on ₹25,000 instead of ₹15,000.
PF at the statutory 12% on wages up to the ceiling. Some employers pay PF on full basic, which raises both columns. Gratuity accrued at 15/26 of monthly basic per year of service.
Year one for a ₹12 lakh engineer, at three EOR price points
Statutory costs stay the same whichever provider you pick. The fee is where quotes differ, so the table keeps them apart and shows the dollar fee next to the rupee costs.
ESI is missing from these totals on purpose. It stops at ₹21,000 a month gross, so it never applies to a ₹12 lakh salary. Charging it anyway at 3.25% would add ₹39,000 to the year.
Not in these totals: a refundable deposit, which some providers ask for upfront, and setup or exit fees. Our India EOR fee table lists what each provider publishes.
Run your own salary through the numbers
India is selected for you. Enter a monthly gross salary to see each employer contribution, then add an EOR fee to see the total with a provider.
Where your hire lives changes the payroll
India has no national minimum wage in force yet, and professional tax is a state levy. A Bengaluru engineer and a Gurugram engineer on the same salary don’t cost exactly the same.
Delhi was the hardest state to pin down. The minimum wage PDF on the Delhi labour department site still shows the April 2023 order, and an October 2025 “revision” that went round payroll groups turned out to be fake. The April 2025 rates above are the latest we could confirm. Bengaluru now has the highest shop rates of the six, after Karnataka’s May 2026 revision.
Shops and establishments rates for the top-paying zone, monthly. Karnataka’s May 2026 rates are disputed by employers’ groups. Delhi’s April 2025 rates are the latest confirmed order. Labour welfare fund shown as employee + employer. Professional tax is deducted from the employee. Checked 22 October 2026.
The headcount where your own company starts to pay off
An Indian private limited company costs money before anyone is hired. Using Deel’s published India figures, an entity runs at about ₹35 lakh a year, against roughly ₹6.16 lakh a year in EOR fees per employee.
Scale: ₹75 lakh a year. Entity figures are Deel’s published estimates of ₹32.5 lakh to set up and ₹35 lakh a year to run. EOR fee at $599 a month, about ₹6.16 lakh a year on Deel’s conversion.
From the second year, the fees for six people already cost more than running your own company. In the first year, setup pushes that point out to about eleven. Company setup takes around two months and needs a resident director, so most teams start on an EOR and move staff across once the numbers turn.
Our break-even uses a provider’s own published entity costs, not a round estimate. Cheaper fees push it out: at $499 a month the switch comes at about seven employees on running costs and fourteen in year one. Your accountant’s quote for audit, secretarial and payroll work will move it either way.
Who actually employs your staff in India
We checked each provider’s own site for who signs the Indian contract. Half of the ten we rank say they own an Indian entity, which is high compared with most countries we cover.
Only five of the ten providers we rank say plainly that they own an Indian entity. For the rest, ask in writing which company signs the contract and runs payroll before you commit.
Owns an entity in Bangalore and supports from Singapore, in Indian working hours.
Says it owns its Bengaluru entity, bills month to month and scores 4.2 with us.
Hires only in India, through its own company, with no deposit asked.
No setup or termination fee. A local partner holds the contract, so ask which one.
Prices are published starting fees per employee per month, checked on vendor sites in October 2026.
See all 15 ranked providersWhat it costs to part ways, by length of service
For a manager on ₹1,00,000 a month with one month’s notice paid in lieu. Gratuity is the line that jumps, because it starts only at five years for permanent staff.
Worked through, gratuity after five years on ₹50,000 basic comes to ₹1,44,231. It’s the figure to budget for, not the formula.
Workers cost more to let go. Staff covered by the Industrial Relations Code also get 15 days’ average pay per year as retrenchment compensation, plus 15 days’ last wages paid into a reskilling fund. Everything must be settled within two working days.
Five questions that turn a contractor into an employee
Indian courts look at how the work is done, not what the contract calls it. Each yes moves the arrangement closer to employment, with back PF and gratuity owed.
Do you set their working hours?
Yes adds riskDo they work only for you, month after month?
Yes adds riskDo they use your laptop, email address and tools?
Yes adds riskDo they manage your staff or sit in your org chart?
Yes adds riskAre they paid a fixed monthly amount rather than per project?
Yes adds riskTools and guides for an India team
How we put this guide together
Co-founder and Editor, HR Stacks
Manjuri runs the editorial process behind our provider reviews and country hiring guides. She has more than ten years of editorial experience, the last five spent on employer of record and global employment.
More from Manjuri- We worked every rupee figure ourselves from the Code on Social Security formulas and the EPFO notification S.O. 5109(E), which set the ₹25,000 ceiling.
- We compared state rates through the notices behind them. Official 2026 PDFs weren’t online for most states, so we used compliance publishers that cite the notification number and date.
- We checked each provider’s own India page in October 2026 for who holds the employment contract, and used the scores from our India EOR ranking.
- We worked every exit scenario through to a final figure and set the entity break-even from a provider’s published costs, so every answer here comes as a rupee figure.
- We recheck the page when a rule changes. The next likely update is a state minimum wage revision or the national floor wage under the Code on Wages.
India hiring questions, answered with numbers
Is provident fund compulsory for someone earning above ₹25,000?
How much gratuity is owed on a ₹1,00,000 salary after five years?
Who pays professional tax, the employer or the employee?
Do I need to restructure offers written before November 2025?
Will an employee on ₹12 lakh pay income tax?
How fast can I hire in India through an EOR?
When is my own Indian company cheaper than an EOR?
Price your first India hire
Fifteen employer of record providers, ranked on what they charge in India, who signs the contract and how they scored on eight parameters.